x

Loading data...

x

Loading data...

x

Loading data...

ChartsValuation & Peer ComparisonCommunity Buzz

Close ✕

NEW DELHI: The anti-business electoral rhetoric, unleashed by the Congress and the Aam Aadmi Party in the current Lok Sabha polls, could further vitiate the already tottering investment climate in the country, according to anxious industry captains and economists.

"This is a very dangerous sentiment to paint all investors as criminals and anti-national elements. If you keep telling investors they are the worst people on earth, they will simply walk out of the country," warned economist Rajiv Kumar, stressing there is no distinction being made between being industry-friendly and industrialist-friendly.

"This constitutes a big pushback for the private sector, which has driven India's growth in recent years, as it implicitly advocates a larger role for the public sector," said Kumar, a senior fellow at independent thinktank Centre for Policy Research, comparing this to a workplace situation where the boss constantly keeps berating a company's best employee, bringing everybody's morale down.

While the AAP, which scaled itself up in recent months on its anti-corruption plank, has been flagging specific allegations of crony capitalism, the Congress has of late taken to targeting big business like never before, in its bid project Modi as industry's darling and therefore, corrupt.

This approach, industry fears, could spill over to the post-poll phase and make it difficult for the next government to take the necessary steps to resuscitate India's growth story.

"Even if the Congress and AAP sit in the opposition with some position of influence, they could keep attacking the next government for taking steps to revive the economy and boost industrial growth," said Kumar.

Biocon founder Kiran Mazumdar Shaw dismissed the business-bashing from the Congress and AAP as not worth commenting on. "This is all just election time rhetoric and I don't think there's any merit in such arguments," she said.

However, the Congress' open diatribe against the allotment of land to industrialists at concessional rates in Gujarat, referred to by its vice-president Rahul Gandhi as a 'toffee model of development' has raised eyebrows and blood pressures in corporate India as it turns on its head a well-accepted global model for industrialization, which even successive Congress governments at the Centre and states have used to attract investments.

"The world over, land is made available for investors and infrastructure projects at a reasonable price, not at such unaffordable rates that it becomes unviable to invest," said Rahul Bajaj, the senior statesman of Indian business, adding that farmers must also get fair prices instead of the pittances they were paid for land in the 1960's, '70s and '80s.

"Would Gurgaon be what it is today if Maruti wasn't given land to start making cars in 1984?" asked Kumar. "The country needs land urgently for industrialization, urbanization and critical infrastructure. China routinely offers land to investors, treating it as equity in new projects," he said.

A top IAS officer at the Centre, who was earlier the CEO of a state industrial development corporation, told ET that several acres of land were allotted at concessional rates to big IT players like Wipro and Infosys in Pune in areas that have now become a hub of employment and development.

"If such land allotments are politicized, then officials will be afraid of clearing such files though the overall impact of a new investment on the local economy would have been positive," he said. Back to the Swinging Sixties

Tata Motors' Nano plant originally planned in West Bengal but established in Gujarat, land allotted to the Adani group for a port in Gujarat, Reliance Industries' proximity to petroleum ministry mandarins - have been at the receiving end of the political stick wielded by the Congress and AAP in this poll campaign.

The AAP is fulfilling a role that was played by the Communist parties in the past, minus their rants about global capitalism, while the Congress is attacking business to highlight its anti-corruption credentials, said Centre for Civil Society president Parth Shah.

"AAP is not attacking all business like the CPM did, but focusing on the problem of crony capitalism that is indeed high in the country. However, they don't make the distinction between pro-markets (in favour of open, free and fair policies) and pro-business policies for specific players," Shah said.

"The Congress' focus on corruption is translating into an anti-business tirade, overlooking the fact that it takes two to tango - government and business," he pointed out.

Rajya Sabha MP Ashok Ganguly, who is a member of the Prime Minister's Council on Trade and Industry, said everyone is missing the big factors that need attention in the country, to focus on the politically prudent and expedient.

"We distort statistics to convey what suits us. Are China and Indonesia foolish countries for allowing FDI in retail?" he asked, taking on the BJP's aversion for freeing multi-brand retail to foreign competition and the simplification of land allotments to the 'one rupee toffee model' by the Congress.

Land mines ahead

Over the last two weeks, Rahul Gandhi has repeatedly said that 45,000 acres of land belonging to farmers was given to one industrial house, the Adanis, at a mere Rs 300 crore or Re 1 per square metre, the cost of a toffee.

According to ET's calculations, at Rs 300 crore, the rate of the land works out to Rs 16.47 per square metre. But it's not the calculations but the semantics behind the Congress' message that is worrying industry as it ignores the linkages between investments, jobs and development.

"Land acquisition should be facilitated by the government so as to fulfill its responsibility for economic development and employment generation. Planned industrialisation is essential for job creation and inclusive growth," said Ajay Shriram, president of the Confederation of Indian Industry.

Such anti-private sector rhetoric, combined with the new land acquisition law which according to top bureaucrats has stalled all infrastructure building plans since it came into effect this January, could make it difficult for fresh investments to kick off in coming months.

"Despite the anti-business rhetoric at the time of elections, most state governments are keen to work with industry and attract investment to their states," Shriram said.

The government can create land banks in order to minimise politics around such allotments, said Ganguly, backing a suggestion repeatedly made by India Inc in recent years. Such land banks, industry has told the government, could acquire fallow, barren and wasteland that can be used for industrial purposes and subsequently allocated to the private sector through a transparent mechanism.

"Industry cannot prosper if the poor cannot be lifted out of poverty. Without growth and reduction in poverty, who will buy my motorcycles, for instance?" said Bajaj, pointing to the need to change the land acquisition law in order to spur industry.

Reform Blues

While industry has a large wish-list of reforms that it would raise with the next government, none of them are as urgent as improvements in land acquisition and a new approach towards environmental clearances, lack of which stalled projects worth lakhs of crores under the UPA.

"The environment has become the biggest problem for industry for growth and employment. We all want our children and grandchildren to have a cleaner world to live in, but without growth and job creation, the environment won't improve," said Bajaj, reminding the Congress that Indira Gandhi had called poverty "the biggest pollutant".

But environment, land, a fresh impetus to infrastructure building — all of it could suffer even if a strong government comes into place but this anti-private sector rhetoric from national parties continues.

"It is apparent that trust amongst business, society and government is probably at its lowest ebb and this needs to be repaired," said FICCI president Siddharth Birla.

"India has seen growth without transparency so far. The challenge for the next government would be to take timely policy decisions that are pro-market and pro-growth, while being seen as transparent," said Shah, adding that Modi's call for minimum government and maximum governance seems to hint at a regime where discretionary powers of ministers would be few so favouritism allegations would be tougher to stick.

"With about 10 million people attaining working age every year, governments are keenly aware of the need to create jobs. However, without proper institutions that ensure transparency and fairness in the allocation of land, the state would leave itself open to such allegations," seconded Shriram. "India is and should be a country of FDI, not FIIs," said Ganguly. "I sincerely hope that better sense will prevail on both benches in Parliament but I am afraid that the likelihood of that happening is very low," he added, stressing that it is difficult to push reforms without a consensus.

However, Rahul Bajaj is one of the few who believes that such politicking won't matter.

"If the Congress gets less than 100 seats and the UPA manages to get around 125 seats, they can keep saying what they want against the next government's formula to revive the economy and help industry, but they can't stall Parliament. So the NDA, which is expected to do better than the Congress and form the government, won't have the excuse that Congress kept citing - that Parliament wasn't allowed to function by the Opposition," Bajaj told ET.

Moreover, the very premise for the anti-business slanging from the Congress and AAP could be shattered in this election.

"Taking on big business and the private sector appears to politicians as a repository of electoral success, but they may be behind the curve as people who have seen the last two decades of India's growth don't share that perception as much as they did before 1991. They realise that it is the dynamic and resurgent private sector that has shaped India's new growth story," Kumar said.

By the end of May 16, they will all know if barbs against the 'capitalist' enemy of the state will be par for the course over the next five years too, or die down in the face of the people's verdict.